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In re Protest of the Rejection of Bid


February 25, 2009


On appeal from the Division of Purchase and Property, Department of Treasury, No. 08-X-39692.

Per curiam.


Submitted: January 14, 2009

Before Judges Cuff and Fisher.

In this appeal, a disappointed bidder for salt-spreading contracts appeals from final decisions of the Acting Director of the Division of Purchase and Property (DPP). The decisions rejected bid protests lodged by Robert LaFerrara Construction Company (LaFerrara) of DPP's award of contracts for spreading de-icing chemicals and abrasives on designated portions of State highways. We affirm.

On August 22, 2007, DPP issued Bid Solicitation No. 08-X-39692 (RFP) seeking bids for contracts to spread de-icing chemicals and abrasives on State highways. Vendors had the option to submit bids on over seventy-eight price lines or segments of state highways. The RFP directed that a bidder's trucks meet the weight and capacity requirements designated for each price line. For example, certain areas required a "Class Q: Truck/Spreader," which can hold 6-8 cubic yards of material. Other price lines required a "Class R: Truck/Spreader," which can hold 10-12 cubic yards of material. Moreover, the truck had to satisfy certain minimum weight requirements.

On September 13, 2007, before the successful bids were announced, DPP issued Addendum #1 to the RFP in response to questions submitted by various bidders. Several bidders had questioned the truck capacity change. In the addendum, DPP explained that the capacity requirements were changed "to mirror DOT's current fleet sizes that they need to supplement with this resource contract."*fn1 LaFerrara, who had submitted bids on certain price lines, protested.

The record reveals that for many years the Motor Vehicle Commission permitted truck owners to register a vehicle at a lower weight vehicle category on condition that the owner not carry more than the registered weight. In prior bid solicitations, bidders sought and obtained bids for price lines that required higher weight vehicles but used vehicles registered at a lower weight category to fulfill the contract. The record also reveals complaints of contractors using lower capacity and lower weight vehicles than required by the contract. DPP sought to alter this practice.

The bids on the RFP were opened on September 27, 2007. On October 19, 2007, a DPP team made award recommendations to the Acting Director of DPP. On October 23, 2007, DPP issued its notice of intent to award contracts for the various price lines. LaFerrara was awarded price line 13, a portion of State highway in Summit. DPP awarded other vendors contracts for price lines 2, 6, and 8; no awards were made for price lines 17, 27, and 44.

LaFerrara submitted a timely protest. In its October 29, 2007 protest, LaFerrara disputed the failure to award contracts for price lines 7, 12, 15, 17, 18, and 44. It argued that it had not been given a fair opportunity to demonstrate that its 10-12 cubic yard trucks met the 40,000 pound Gross Vehicle Weight (GVW) requirement. LaFerrara asserted that the GVW requirement had not been disclosed prior to submission of its bid. It also claimed that its slightly less than 38,000 pound vehicles could adequately and safely perform the work. LaFerrara and other vendors requested an opportunity to reregister their vehicles to the higher weight category.

Following receipt and review of the protests, DPP issued a second award recommendation. DPP found that, despite its low bidder status for price lines 12, 13, 17, 18, and 44, LaFerrara failed to meet the size and capacity standards established by the RFP.*fn2 DPP noted that it requested LaFerrara to submit its trucks for inspection by NJDOT to confirm that the vehicles met the minimum class capacity as permitted by the RFP. NJDOT reported that LaFerrara had not done so. Furthermore, NJDOT stated that a visual inspection of photographs, submitted by LaFerrara of the vehicles that it proposed to use for price lines 12 and 17, demonstrated that these trucks failed to meet the 10-12 cubic yard capacity requirements.

A notice of intent to award contracts was issued on December 31, 2007. Vendors were required to submit protests by January 8, 2008. LaFerrara filed protests for price lines 6, 12, 13, 17, and 44. LaFerrara contended that it fulfilled the capacity requirements and provided the letter submitted to NJDOT with the results of its equipment test with salt under the supervision of a crew superintendent. LaFerrara stated that an NJDOT loader operator witnessed the same test on December 5, 2007, in the Bridgewater yard and that it offered an NJDOT area supervisor the opportunity to inspect its trucks at the LaFerrara yard. The protest also reported that NJDOT inspected LaFerrara's trucks but inspected the wrong trucks in the wrong yard. LaFerrara objected to a second NJDOT request to inspect its trucks at a time not associated with a "snow call out." In a second letter, dated January 11, 2008, LaFerrara supplemented its prior protest with further incidents of purportedly unfair treatment.

On February 14, 2008, the Acting Director of DPP resolved the bid protest. One letter decision addressed price lines 6, 12, 13, 17 and 44. As to price line 6, the Acting Director found that LaFerrara did not submit the lowest bid and only four of the five designated vehicles met the 10-12 cubic yard capacity and 40,000 pound GVW specifications. As to price line 44, the Acting Director found that LaFerrara had impermissibly substituted a qualifying vehicle after bid submission. She noted that bidders were only permitted to amend the existing registrations of designated vehicles. Finally as to price lines 12, 13, and 17, the Acting Director found that the designated vehicles did not satisfy the RFP requirements. She also cited reports by NJDOT that LaFerrara had used trucks with inadequate hauling capacities on other contracts. The Acting Director noted that prior incidents of noncompliance were highly relevant to this RFP and emphasized that the RFP allows consideration of past performance.

A second letter decision addressed the award of the contract to other vendors for price lines 6, 12 and 18, and the disappointed bidder's complaint that the successful bidders were not performing the contracts in accordance with RFP specifications. Consistent with RFP specifications, the Acting Director stated that LaFerrara lacked standing to contest performance by successful vendors. She continued, however, to address the merits of the LaFerrara protest. She noted that a single departure from specifications is not determinative. Rather, a formal complaint would be filed by NJDOT "only after continued failure to perform" and that NJDOT had not filed any formal complaints. The Acting Director stated that she found "no basis in the record to set aside the independent determinations of the NJDOT regarding the performance" of the successful bidders on these price lines. She also reiterated that the issue of truck size and hauling capacity was the central issue of the separate protest addressed in the other decision issued that same day.

On appeal, LaFerrara presents three arguments. He contends that "the bidding process was corrupted by the exercise of undue influence upon the Agency making the decision," the Acting Director's decision was "arbitrary in its formulation and discriminatory in its effect," and the initial award of price lines 13 and 27 was changed without due process.

N.J.S.A. 52:34-12a(g) grants an agency advertising for bids discretion to award a contract after receipt of bids; it provides:

[An] award shall be made with reasonable promptness, after negotiation with bidders where authorized, by written or electronic notice to that responsible bidder whose bid, conforming to the invitation for bids, will be most advantageous to the State, price and other factors considered[.]

As RFP Section 4.4.8 further clarifies, "[t]he State may reject any or all bid proposals not in accordance with the RFP specification or irregular in other respects," and "[t]he Director may reject a bid proposal or rescind a contract if equipment is found to be unsatisfactory."

In determining whether the Acting Director properly exercised her authority, the scope of this court's review is limited:

[T]he judicial standard for appraising the propriety of the exercise of [the director's] discretion in awarding a contract or in rejecting a bid or a bidder should be that the courts will not interfere in the absence of bad faith, corruption, fraud or gross abuse of discretion. [Commercial Cleaning Corp. v. Sullivan, 47 N.J. 539, 549 (1966).]

This court must also defer to the agency's findings of fact so long as they "'could reasonably have been reached on sufficient credible evidence present in the record,'" Jackson v. Concord Company, 54 N.J. 113, 117 (1969) (quoting Close v. Kordulak Bros., 44 N.J. 589, 599 (1965)); however, the agency record and findings must still be reviewed carefully, as appellate review must not simply serve as a rubber stamp. Pressler, Current N.J. Court Rules, comment 7.3 on R. 2:10-2 (2009) (citing In re Taylor, 158 N.J. 644, 657 (1999)). Overall, our courts have upheld the "broad and general statutory standards" that delegate authority to agencies to make public bidding decisions that "promote . . . honesty and integrity," and benefit the taxpayers, and in general, public good. Keyes Martin & Co. v. Dir., Div. of Purchase and Prop., Dep't of Treasury, 99 N.J. 244, 255-56 (1985); see also In re Honeywell Info. Sys., Inc. Protest of Contract Award Requisition X-32, 145 N.J. Super. 187, 200-01 (App. Div. 1976) (affirming the public interest in guarding against favoritism, improvidence, extravagance and corruption), certif. denied, 73 N.J. 53 (1977).

Applying this standard of review, we discern no basis to disturb the determination of LaFerrara's protests. The February 14, 2008 final decisions issued by the Acting Director of DPP are supported by sufficient credible evidence in the record as a whole and conform to the law governing public contracts. R. 2:11-3(e)(1)(D).


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